Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

Lot of panic just yet. Nifty futures in the positive in singapore. But see how other markets are faring. Jakarta coming online. That is 1. 5 lower in indonesia. We are watching chinese stocks under a bit of pressure. As we see shortselling on these local exchanges, reaching a record. Hang seng down 112. Hsbc and Standard Chartered having another bad day. And the kospi as well, 1. 5 lower. As take a look in terms of what we saw overnight. The dollar very much in focus. The biggest gain in three months surged on this haven buying. We see real yields are higher. Those things have stabilized a bit. Did see brent crude actually, wti falling from 4 overnight. Gold is hovering around 1916 and silver really took the biggest hit yesterday with the fall of nearly 8 for silver. Taking a look at fx, with that dollar, we are seeing negative reaction that comes across g10 in asia fx. You see the pound. Cultic concerns back in the forefront. We could hear more from boris johnson. The Prime Minister having a crisis talk later on today. We could be imposing stricter lockdown measures. Your offshore renminbi is below that 680 market, 6. 78. Lets get to the first word news with Karina Mitchell in new york. President trump is said to be leaning towards Appeals Court judge amy barrett to succeed Ruth Bader Ginsburg on the supreme court. He is also considering as many as five candidates. She is a midwestern catholic and a favorite among the abortionists. The president plans to announce his choice before the weekend and wants Republicancontrolled Senate confirmation before the election on november 3. Their jay powell will u. S. Economy is improving, but has a long way to go before fully recovering from the pandemic. They said many economic withators show improvement employment and overall activity remain well below precovid levels. Remains highlyd uncertain. The st. Louis fed president told bloomberg the new policy of letting inflation run hot could help. I think it has a good chance of working. I think the simple version of this is that the fed will be much less preemptive about trying to raise rates to contain inflation when inflation is below target. Karina china has exhilarated a blacklist that could ahead u. S. Tech companies. Perforce is a leaders are split over when or whether to pull the trigger. The dow says that highlevel debate shows china respond to threats from washington in may way until after the election. China has reacted in kind to u. S. Moves to avoid driving the relationship towards collapse. And the Chinese Military has airbornea video from exercises that shows Nuclear Capable 86 bombers carrying out a simulated attack. Analysts say the apparent target like itsike appears on the American Island of guam in the western pacific. It follows repeated breaches by chinese claims that the socalled medium line between the mainland and taiwan. For hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Is the tiktok oracle deal suddenly looking shaky after President Trump said he might renege on his approval if he totaloracle does not have control of the new u. S. Entity. The Chinese Government is signaling reluctance on the deal through state owned media. Our chief north asia correspondent Stephen Engle us from hong kong with the latest. How much doubt does this cast on the deal . A lot more doubt that was in place 24 hours ago when donald trump said he give the blessing to the deal in concept. Now, perhaps he has dug deeper into the National Security element and realizes, especially after bytedance put out a blog yesterday appealing to the Chinese Government saying, we are not giving up total control of our algorithms. In fact, they said that they are going to oracle will only have limited access to view source code for safety purposes. They are playing more towards the Chinese Government approval rather than trump. But trump telling fox news an interview that the only deal the he sees feasible, and one that he will approve is one that oracle has total control over this new Tiktok Global entity in the United States. This was a lot of money to walk away from. Company, or an entity in the u. S. That bytedance are seeking a 60 billion valuation. 20 billion of which would come from oracle and walmart in that partnership. 80 would still be controlled by bytedance, a chinese company. But 33 of that is coming from u. S. Interest already invested in the bytedance, like Sequoia Capital and general atlantic. It looks like it is going to come down to those National Security concerns. Whether the algorithms and the source code will be available to the u. S. Interest beyond just having the data stored on u. S. Servers on oracles cloud network. There is still some any questions on who exactly is going on how much. Who will control the technology and who will be on the board. Is there any arrangement that can actually appease both sides . Its tough. We are talking National Security. Know the chinese take national especially now under perceived threat from the west, whether real or perceived, and National Security. Here in hong kong its very real. Keep in mind that the chinese law requires companies in china to hand over data to the Chinese Government upon request. If all that data is going to be secured on oracle servers in the United States, the a states would probably say, wait a minute, no, we will not hand byr data to you, therefore proxy, the Chinese Government. For donald trump, his decision will come down to two main reasons. Is this going to be good for america . Will it create 25 thousand jobs . Will it be headquartered in texas . Will it be secured in u. S. Servers . Will there be an ipo within the year that will dilute that chinese shareholding and allow individual american investors to invest . And, does this give the optics ahead of the election that he is being tough on china . Asked me again in another 24 hours. Yvonne im sure we will have you on around that time. Our chief north asia correspondent with an update on the tiktok oracle deal. Our exclusive interview with Robert Kaplan on why he thinks the feds guidance may be a may be encouraging excessive risktaking. Tom 156 economies representing nearly two thirds of the worlds population have joined the 18 billion Vaccine Initiative called kovacs. But the u. S. And china are staying out. More on why. This is bloomberg. Tom welcome back. Fed chair jay powell will tell congressional lawmakers later today that the u. S. Economy is improving, but has a long way to go after committing to three more years of near zero rates. But one top official disagrees with that outlook. Dallas fed president Robert Kaplan descended dissented at last weeks meeting and said the guidance is too restrictive. Robert we should keep the current setting of the fed funds at zero to 25 basis points until we whether the pandemic and we are well on track to achieve full employment and price stability. That, by the way, is probably going to take at least 2, 2 and a half, three years. The issue is, beyond that point, once weve weathered the pandemic and are on track to reach our goals, i probably think its appropriate to remain accommodative, or maybe even highly accommodative. Im not sure its appropriate to decide right now that at that point we should leave rates at zero. I would rather leave those judgments to future committees because i think the world is going to look very different post pandemic than it does now. Id rather leave the judgment to future committees who can assessed all the factors that are relevant in order to make that decision. Does that suggest you think we could come out of this with faster growth and most people are anticipating . Robert i will put it a different way. I think weorecast are going to have solid growth in the third quarter. 30 annualized. A strong Fourth Quarter. Above trend growth in 2021. , by they own forecast are 2023, and i know thats going a long ways, we can start to approach an Unemployment Rate certainly below 4 . Say 3. 5 to 4 . I believe that is possible. Obviously we will have to see. A lot of that will depend on how will we manage this virus, fiscal policy and a range of other decisions. Point,n we get to that the question before the house is, do you want to still be accommodative in light of our new framework in order to meet in order ton goal, remain accommodative, does that mean we need to leave rates at zero . Im not sure, but thats the point. I think its hard to know that far in advance. I want to make those judgments at the time. Onis that enough to dissent question mark is that important enough . Dissented on . Is that important enough . Robert for me it was. There were a few reasons why i did that. What i just went through. And i would rather use Forward Guidance if we got positive benefit. The world the meeting already thought that rates would stay extremely low for the next two to three years. My concern was that by making this commitment now i was not sure how much additional benefit it would be. On the negative side it means that if you are in the asset markets, if you are a saver, a pension fund or an insurance ,ompany or Market Participant it gives you a signal that you will need to take more risks. My concern is about building up at building up excess risk taking, which can create fragilitys and other excesses in the system, which are hard to see in realtime and easier to see in hindsight. It could create issues for us to meet our goals. That was the reason i felt that the costs were not worth the benefits. Conference,ws chairman powell says over and over again that the new guidance is strong and powerful, but there seems to be a lot of skepticism on wall street about that. I would not over read the market reaction. It has been a few days. I think these decisions usually are not the reaction is not measured in three or four trading days. Its measured in the fullness of time. I think making a statement that people should expect, even , that ratesandemic will stay at zero until we reach 2 and are on track to proceed 2 . I think as the months and years go by, i think people will increasingly realize the power of that commitment. And so, i think its more significant than the markets it me be initially markets may be initially realizing. Yvonne that was dallas fed president Robert Kaplan speaking to bloomberg. More is coming up. We speak to the vice chairman at a p. M. Hong kong. That will be at 1 00 p. M. In london. You dont want to miss that interview. Lets get to the latest headlines. A whistleblower at boeing is calling on aviation regulators for extra protections concerning the grounded 737 max. They raised concerns about the design and said the proposed fixes dont address the multiple hazards identified in the two fatal max crashes that grounded the jet. Agreeas more engineers that more is needed to adjust the plans to fix it. Hsbc continues to fall in hong kong with the fallout from alleged suspicious transactions. One of almost 100 banks named in leaked u. S. Documents that saved 2 trillion in transactions could have been Money Laundering. Hsbc has temporarily banned on its social media accounts over fears of negative reaction to the claims. Aims for a courier second listing in hong kong. 218 local dollars a share or 2018 u. S. About 2 tof mondays close and below the maximum bit of 268 hong kong dollars for the Retail Investor portion. Cto expresses one of three listings selling shares this week. Said the plan to spin off j. D. Health on the Hong Kong Stock Exchange and the timing will depend on market conditions. Company has hired bank of america and ups to work, listing, which aims to raise at least 1 billion of the shares sales. Most 13 billion have been raised in Health Care Sales in the region this year. Tesla is hinting at it may make its own battery cells to meet demand, even if it rents from outside. Elon musk tweeted the possibility ahead of the companys annual shareholder socalled battery day presentation, which will showcase innovations in maintaining teslas lead in electric cars. An internal memo must indicate tesla may be in my for a record quarter. Funny more ahead. This is bloomberg. Tom welcome back. Microsoft is making its a gift videogame purchase ever for preparing to launch a new xbox generation in november. Its set to acquire the owner of. Ublisher with games including Elder Scrolls and doom. In a deal that could create a netflix for gaming. Microsofts Vice President spoke with bloomberg technology. We view content as being critical to our platform. Game passes growing very fast, over 15 million subscribers. Going intosuls preorder of our next generation of consoles. We launched x cloud last week so people could play our games on their mobile phones. With this move we double the number of content creator we have inside of xbox. Which we think is a great move for the Xbox Community. Emily once inside xbox, will they start making games only for xbox and pcs and not playstation . Phil our commitment with this move is that xbox and pc and people playing on game pass will get the games. The collection of bethesda studios will come to xbox and xbox game pass. Thats a huge commitment us. I think we will make a decision on a casebycase basis. But this is a move to show the strong commitment to the Xbox Community that great games will be coming. Emily gaming traffic has soared. You have 15 million subscribers on game pass. Some gamers have been disappointed in some of the gaming offerings. How much of this is forward demand given the pandemic . And what do the quarters ahead look like . Phil we see gaming is a strong growth category. As been for many years. 3 billion people play video games on the planet. Half the connected world. Its a 200 billion business. Both of those numbers growing by double digits. Gaming is a secular trend in entertainment. People moving from passive entertainment active entertainment. Kids everywhere are playing video games, minecraft, fortnite. If the transformations we are seeing in the business. Said, content is keen to i have to ask about the tiktok deal. How big of a deal is it that microsoft lost the tiktok deal. . Phil we were pretty public about how that played out. I dont have anything to say about how tiktok is working now. When i look at our growth aspirations in the consumer spaces of microsoft. Our investments in gaming and reaching communities everywhere will be critical to our longterm success with gamers. Trump administration is pushing u. S. Gaming companies on their ties to tencent. That means fortnite and league of legends, which are hugely popular on xbox or it what is microsofts position in this geopolitical tugofwar . What if they start cracking down on fortnite and league of legends . A longterme taken approach. People should play the games they want to play with the community they want to play with on the devices they want to play on. Thats central to our strategy. We work with Global Partners to do that and we hope to continue to do that. Its a cornerstone of our strength of reaching over 3 billion gamers on the planet. There is a battle array out going on between epic games, apple and google. Xbox has its own situation with apples app store. Do you think apple and google are monopolies like ethics says epix says . It should bek available to everyone and we are committed to making that happen. We are committed to working with a large global operators off there. We will work with apple, google and samsung. We are doing that today. Gamers should have choice with the devices they have on the content they get to play. That was microsofts executive vp of gaming phil spencer with emily chang. Lets get to our coanchor who is tracking all of this. Risk off day. An hour into the china session. Walk us through the price action so far,. Hsbc and the banks given that the drought we saw yesterday. That is one drag. The other drag that has come out the last 20 minutes or so is the airline space. You have the likes of air china, so on and so forth. You are looking at the graphics on your screen. I dont know if its a price or the broader benchmarks. It seemed that we were sitting above the 50 Day Moving Average a couple of weeks ago. Another case in point was yesterday. It is a key level to watch. We will look at several other levels. As things stand, that is where we are with several parts of the market tracking at lower. We are seeing that in the banks and airlines. A significant drop in the shares for this company. What is behind it . David alibaba is raising the state 25 . Was over 10 . It watching many movers. A substantial downside in the stock. Of controversy around one of the trading debuts in hong kong. Whats the story . David its listed in the u. S. , debuting today in shanghai space , the hotel developer. Shares are up. They are questioning some of the data financial, the accuracy of some of the data here. But as beings stand we are up 3 to 4 . We will see if it plays into the regular session. On theenty to watch markets. David inglis, our coanchor out of hong kong with the latest. Stay with us, all the Market Action in a next half of the show and great interviews. This is bloomberg. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save up to 400 a year on your wireless bill. With the carrier rated 1 in customer satisfaction. Call, click, or visit your local xfinity store today. 10 29 a. M. In hong kong. Ofing it will retake control any new business in the u. S. , seeming to contradict President Trumps assertion that it would be run by americans. It also is contesting the president s claim that the u. S. Government will pocket 5 billion as part of a deal. Billion initiative to deploy covid19 vaccines around the world. 156 countries and regions are taking part. Its goal is to have 2 billion doses available by the end of next year, focusing initially on healthcare workers and people with high risk. The u. S. Has announced new saying curbsiran, are back in force despite criticism from allies and heated debate at the Security Council. Tehran is inys violation of the accord. The 15 Security Council nations have said they refuse to support new sanctions. I will take the first action ,nder this executive order irans Defense Industry and its director. We are also sanctioning the president of venezuela, nicolas maduro. Iran has worked with venezuela to flout the u. S. Arms embargo. This is a warning that should be heard worldwide. Turn Oil Operations bracing for more turbulence in the gulf of mexico. Already storm beta has sparked flooding. The National Hurricane center says beta could drive a storm surge of more than a meter at high tide in galveston day galveston bay. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. O im Karina Mitchell. This is bloomberg. Tom some breaking lines crossing the terminal, caught up in this accounting scandal, being fined by chinese regulators and authorities around 61 million yuan. Firms,coffee and other this was a company embroiled in a scandal over exaggerating their sales numbers. Elsell bring you anything when we get more details on that story. Vonne interesting to see china with this fine. A quick look at the markets. The text selloff we saw recovered toward toward a late session in the u. S. U. S. Futures very much in the red. Morgan stanley saying, when it comes to the text selloff in the u. S. , we are only halfway there. Nikkei futures still a touch higher. The u. S. Dollar has been steady but we saw a surge in haven buying. That is affecting currencies in this part of the world. Bonds, we saw treasuries in particular did get bid up overnight. 10 year bond futures still in the green. Continue as well, we to see zi yan on its strength. Just arude recovering bit after we saw that 4 drop in oil overnight. Will beoking like they able to export crude once again. Gold futures, slightly above right now. We talked about the banks. Losses forond day of the stock. Set to go on a social media lockout. Down. Hart hsbc at 2840. We are watching some of these other banks like hung sandbank, seng bank,ike hang bank east asia. Tuesday in california, teslas battery day. Asian suppliers look like they are anticipating some news, and to the positive. The cell some of partner suppliers. His elon musk going to announcing cheaper battery . Is he going to manufacture his own cells . It seems like these relationships could get a little bit more complicated. Tom elon musk himself has been tweeting leading up to this event. We are expecting some announcements. He also sent out internal memos to his team, suggesting they might be on track for a record quarter. That ties into the tech story as well. 400 yearp more than to date. A little over 1 in the u. S. Trade yesterday. Broadly inade more the u. S. And in this part of the world. We can talk about the tech trade and the Broader Market moves with the head of Asia Investment strategy at j. P. Morgan private big. Private bank. What is your take on what we have been seeing . It seems to be stalling out, concerns about a lack of stimulus out of the u. S. , concerns that the fed has not communicated more clearly, and concerns about spikes in the virus. Really nailed it with all those reasons. It is surprising we have not seen the market move to new, reduced expectations for stimulus until recently. That has been a very important important driver since march. Now, with stimulus looking more clear, markets are pricing that in as well as pushing out some of the economic normalization. You are seeing some of these new waves in europe, seeing the virus spreading without much slowdown and control. Economic normalization is pushed out further and that is why you are seeing some of this rotation into the tech and work from home names. Tom what is the advice youre are giving your clients now in terms of adjusting their portfolios. As you mentioned with tesla, we have seen a very strong rally across some of the largest tech names since march. While we are still seeing data improve, i think stimulus expectations have come down. There is a big question over timing and other questions around the vaccine. Given the fact that we will eventually see some normalization, whether it is through a vaccine or herd , trim some Technology Exposure and had some volume or cyclical after the run we have had in tech. Ok. And, alex, what do you see from now until november 3 . There is a lot of talk that we could get a very hotly contested election outcome. Is there a clear runway . There are still a number of risks. Not just electionrelated, of course i think that is one of the key ones. No one has answered. Volatility markets already pricing in some potential risks. Just a delay in terms of results, that is already being somewhat priced in. Another risk, as we have talked about with regards to the vaccine and stimulus, there are very clear risks to market. It seems like there is a symmetric downside versus clear upside. We are not really aggressively adding to risk. We are still recommending taking risk through highyield, adding through core bonds and durations. Where you have seen a real positive runup, trimming some of that and adding to the positive sectors. Little bitioned a about trimming gold, you like chinese bonds as well. The big banks and negative reaction to this report on Money Laundering, sanctions risks piling up as well, is any of this really new to you . It seems like this is old news. That is a good question. It is not entirely clear how it affects earnings unless you orld expect to see fines additional measures that could hurt the revenues. Now, markets are very reactionary just given how much volatility and noise there is. A lovere not necessarily sector at the moment either. Au have not seen that much of rebound from financials. It is a very unloved sector at the moment. You have been looking a lot in terms of the chinese economy. Obviously, we have seen a bit of a range Bound Movement when it comes to the equity market. But the strength in chinese exports, what are you seeing . That reallyne trend has caught us off guard over the last couple of months. The chinese export rebound has been extraordinarily strong, i think for two real reasons. They were able to fill global demand. Also, chinas production strengths are wellsuited to a covid economy. Surplus,strong trade really positive in terms of trade shock. We thought, if anything, the renminbi should have already appreciated more than it has. We have already seen quite a large move, but still some upside, which has made us more positive about local currency bonds. Ofyou touched on the lack fiscal support or additional fiscal support out of the u. S. You also tied that in two how that is connected with the exports out of this part of the world. Tie that into the fx space. What are the consequences for currencies in this region on the back of fading stimulus out of the u. S. Risk toes present some the extent that you were to see that bleed through into a consumption or Household Consumption slowdown. When you look at the relationship between the u. S. Consumer and chinese producer, it harkens back to the days when the u. S. Fiscal stimulus has been a strong driver of the production cycle. Riskesents somewhat of a if you were to not see more fiscal stimulus. Mark,s the real question this consumption rebound, does it become selfsustaining in the u. S. . And as you see improvements elsewhere, does that improve, or does that hinge on the support that you have seen. The currency is somewhat of a risk to depreciation fx against the dollar. Tom we always appreciate your insight. From j. P. Ex wolf morgan private bank. Coming up, the program for the Coronavirus Vaccine is growing but china and the u. S. Are staying on the sidelines. This is bloomberg. Havezens of countries signed on to the Global Vaccine Partnership which aims for equitable access to a future covid19 treatment. However, it is moving forward without the u. S. And so far, without china as well. Our beijing bureau chief has more on the story. Tell us the rationale for why china might not the on this initial list. Chinahave not heard from explicitly whether or not they want to join, but they are not on that list. China has been signing one on one deals with countries and also advocate especially with its allies in africa and latin america. This could be for one way for china to repair its image around the world. Negotiations the have not been resolved and that is probably why they have not made a public decision. How effective will this initiative be if you do not have the help from the u. S. And china . To be seen,s especially if we see vaccines coming out from either one of those countries first. China says it has vaccines that are already being tested on employees of state owned enterprises. It is possible that it could roll out a vaccine. Ofre is also the question whether people outside of china would one to take that vaccine. People have been writing about the dramatization of chinas attempts to tackle the coronavirus but it has been met with skepticism. Talk us through what happened there. This seems to be the latest misstep in the governments attempt to rewrite the narrative of the virus, how the government handles the virus, kind of skims over or completely erases a lot of the chaos or mishandling that happened at the beginning. The public is not willing to accept that anymore. Anytime the government has people witnessed what , itened in their own cities does not reflect reality. Censorship has tried to erase. Tom beijing bureau chief sharon chen. Coming up, social media blackout. The fallout from the suspicious report scandal in the Banking Sector heats up. We will bring you the details later. This is bloomberg. Ordered a social media blackout in the wake of a leaked report alleging suspicious transactions of 2 trillion in 90 banks. Deutsche bank, j. P. Morgan, other banks as well. Lets get more from our finance our asian finance senior editor, david stanley. Some of the transactions are going all the way to 1999 to 2017. A lot of this is old news, no . It is old news and new news in some way. Some of the state to 2017, not that long ago. This is something that has been flagged many times. These banks have paid a combined 20 billion in fines. We are talking to trillion dollars of funds that have been moved potentially with Money Laundering. According to this report, that is just the tip of the iceberg. It is raising questions about these banks abilities to stop this activity. Report telles this us about what looked like failed efforts to stop Money Laundering . Extent toshows the not only the depth, but the breadth of the problem. It is not being done by criminals and their garages. These are done by major financial centers, led by london , followed by new york. Clearly, it is a problem at the highest level. Deutsche bank seemed to carry the largest load here, but also some big movements from j. P. Morgan, 500 billion. It is a whose hue a whos who of banks involved in this activity. Lets do a quick check of the latest business flash headlines. Microsoft says it plans to buy the Media Company publisher of bethesda software, the Biggest Software purchase ever. They own several studios across the world and will give Microsoft Xbox business a much needed boost to new titles and game developers. Succeeded inny has sayingacking a lawsuit there is faulty legal pretext to cancel a buyout. Denied tiffanys bid to have the matter decided before the original closing date on november 24. The ruling puts pressure on lvmh to justify dropping luxurys biggest ever deal. Kola shares ni dropped dramatically after the chairman resigned. It will be seen on wall street s a gut punch for nikola lofty ambitions. Hadver, ives says nikola backup and they will focus on expanding their links with gm. Reaching out to rural india in a time of antichinese sentiment in stores on wheels. It will stop at local places where people gather for street markets. They plan to sell tvs, security cameras, phones, and sunglasses along with devices. A post virus return to the seas for cruise lines of recommending tests for all passengers and crew. It is one of 70 steps sent to the cdc. A panel hopes they will clear the way to reviving the industry. Sailing incess is is selling two of its liners and canceling the suspended rounds. Using technology to help track purchases, and can now follow just about every sale as it looks to step up sustainability efforts. The thirdlargest processor is able to direct all of the cocoa in Nine Countries back to individual farms and communities. The risk off mood at saw toward the end of the day in the u. S. Has bled over to the session in asia. Japan is closed for a national holiday. On the screen in mainland china. Msci asiapacific down 0. 6 . The futures over the u. S. Down 0. 2 . Increasing mood that there is concern around the lack of additional fiscal stimulus. Sgx nfty. F the the dollar, strength for the dollar running flat at 1170. Way,0 year future, by the the bond you are looking at flat. Brent crude, 41 a barrel. Gold futures are a little higher at 19. 13. Yvonne so, it is looking like we have come full circle when it comes to this global selloff. Today, we are going to be looking ahead to of course Indian Markets and thailand opening up in the next hour. This is bloomberg. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with Xfinity Mobile. Haslinda it is almost 11 00 a. M. In singapore and hong kong. Welcome to Bloomberg Markets asia. Stories, the tiktok oracle deal muted as china says bytedance could retain control and President Trump saying he could withdraw approval. Haslinda elon musk prepares for a tesla shareholder meeting. They may produce their own batteries to meet demand. Upy are expected to ramp production. Saying they powell u. S. Economy is improving but the road will be long. Markets, it ise risk aversion, asia down for a second day, financials a big drag for most indexes. There are concerns about u. S. Stimulus package and new virus restrictions. After that, tiktok and oracle deal now in doubt. One 10th ofex down 1 . Airlines among the laggards. Morgan stanley says a remains cautious. Hsbc extending losses after slumping the most since 1995 yesterday, and pretty flat right now, the sct planning to restore a daily limit that says market volatility is back to normal levels. Look at thes prospects of the trading day in india, looking like a steady start for the nifty, also moving up for new york crude. To give some context, we have indian equity markets, the markets in mumbai on monday fell andmost in three weeks, benchmarks over 2 each. The cuts were steeper in Broader Markets overall. Looking at new york crude, what we had was oil having a really rough time of it, recovering by two thirds of 1 . Overall,onto losses amid signs of a in the pandemic. There could be more lockdowns. Looking at nasdaq futures, also under a little bit of pressure. Moving now to new york itself and looking at some of the first word news headlines, were going to get over to Karina Mitchell. Karina President Trump seems to be leaning toward Amy Coney Barrett to succeed Ruth Bader Ginsburg on the supreme court, although he is considering as many as five candidates. Barrett is a favorite of antiabortionists. The president wants republican control Senate Confirmation before the election on november 3. Meantime, fed chair jay powell said the u. S. Economy is improving but has a long way before fully recovering from the pandemic. Comments released ahead of his testimony say many Economic Indicators show market improvement for employment and employment,vvy but activity remains low. The path forward remains uncertainty. The st. Louis fed chairman told us that running hot could help. I think the simple version of this is that the fed will be much less preemptive about trying to raise rates to contain inflation when inflation is below target. Karina reports from beijing says china has accelerated a blacklist that could hit u. S. Tech companies, but sources say leaders are inflicted over whether to pull the trigger. To respondsure how to threats from washington and may wait until after the election. So far, china has acted in kind to u. S. Moves. The Chinese Military has released a video from airborne exercises that shows a Nuclear Capable h six bombers carrying out a simulated attack. Analysts say the apparent target of the attack seems like an american airbase on guam. There were repeated breaches of chinese planes on the socalled median line between the mainland and taiwan. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Looking at the tiktokoracle deal, looking shaky now trump saying he may renege on his approval if oracle doesnt retain control of the u. S. Entity. China also signaling reluctance on the deal to go through, through state owned media. Stephen engle joins us from hong kong with a look at how much doubt all of this has cast on the deal overall. Yeah, how often do shotgun oranged, first weddings work . Thats what this is. We are down to a tight timeframe forced by the trump administration, and then you have the inlaws, china and the trump administration, possibly scuttling this because they have to give approval to this shotgun marriage. I dont just want to talk in metaphors but we are down to this one day donald trump says one thing and the next day he is countering what he said yesterday. 24 hours ago, he said he gave a blessing to this deal that was hastily arranged in concept, but today when we are looking at the share structure, he is saying he wants oracle to have total control and thats not something the chinese want. Now isre structure right 20 would be owned by oracle and 7. 5 , and the and rest by bytedance, but they also have american investors in Sequoia Capital, general atlantic, etc. , that would take American Interest in the new entity to about 53 . Trump onon fox news, fox news is saying he wants oracle to have total control. The chinese inlaws are getting involved because you have the editorinchief of the global times, the mouthpiece of the communist party in peoples daily saying if this is the case, he predicts the Chinese Government will reject it because the agreement would endanger chinas National Security interests and dignity. A lot of parties involved in this marriage, and expensive one. Haslinda youve been covering this from the start and you say it is a complicated set of dynamics. Quickly what is the likely outcome . Stephen ask me again tomorrow. [laughter] hasn, for donald trump, he ultimate control over this, he can say yes or no and the Chinese Government can say yes or no, despite the reviews by Security Experts and the like. It will come down to as we get close to the election, donald trump saying is this good for america . 25,000 pledge jobs, data stored in the United States on oracles cloud service. And is he being tough on china . That will play to the electorate in his mind. But china will say we require Chinese Companies to hand over data upon request, that is the law. If that data is in the u. S. , can they do that . There are National Security issues and space issues. Haslinda thats right. Tephen engle toll to come, indias plan stoke its manufacturing sector. The Electronic Association president about how the program will favor the countrys mobile phone makers. Rishaad next, we talk investing strategies and can long will be on and he says as he on stocks might catch up north asian ones in the next few months. This is bloomberg. This is Bloomberg Markets, James Bullard says the lessroach aggressively in the virus crisis. He says theres enoughs fiscal mulus in the covering stimulus in the pipeline to get through the recovery. Aggressively,ess i think it will lead to higher inflation and higher inflation and stations, and it will exceed the target. If there was ever a time where you thought maybe inflation in place, youve got gigantic fiscal deficits combined with a more relaxed central bank and really rapid growth, off the charts rapid growth. Will get some inflation, i think, even in the near term over the next year. I dont think it will be quite as quiescent as it was before the pandemic. You also set on friday that you see as many people you see, as many people do this massive rebound in thirdquarter gdp, 25 , 35 , you said another reason why it will help it on track to 2 i want to ask you specifics about this. I doesnt look like there will be a stimulus package passed before the election and it is hard to say when it will be passed after. What difference does that mac that make if any to your forecast . The original fiscal package that was passed in march april, that was really calibrated to a bigger shot than the one that has developed, where certainly we are in a pandemic and it is a big shock and disruption, not as big as what they were thinking at that time. What we ended up doing is of gdp, but if4 you look at current forecasts for this year, it looks like gdp or National Household income will only be down 3 4 . You borrowed quite a bit to cover a whole that does not look like it will be as big. I am hopeful we still have enough in the pipeline to push us through, get the growth going in the second half of the year, that seems to be what is happening in the third quarter, and again, continue in the Fourth Quarter and into the first part of next year. I think we might be ok. Theres not as much of an imperative about a new fiscal package as there might have been or august. In july you are referring to the imperative for congress to doing for congress to do something, they might not see it as much, necessaryit isnt as as we thought. Many officials have said more stimulus is needed, recovery at risk if you dont get it. What are you saying . My point is what people were thinking was that 2020, at the , householdyear income would be down 8 or 10 or Something Like that. 10 or out and borrowed more on International Markets to cover that whole. Now it only that hole. Now it only looks like it will be down 3 4 at the end of the year, and we still bought 10 . In some broad, macroeconomic calculation, we have enough resources to cover this. Of course it is unevenly distributed and there are many issues around how it gets to the disrupted households and that is important, but as far as the thinksize of the thing, i we might be ok and able sustain able to sustain recovery. President James Bullard speaking exclusively to kathleen hays. Meantime, asian stocks extending losses after mondays selloff, paved by declines in korea and china. This comes after u. S. Equities slid on concerns about coronavirus restrictions and prospects for fiscal stimulus. With our to analysis portfolio specialist. Canned, good to have you with us. , good to early ken have you with us. It is too early to say the bull market rally is over. Ken right now, especially with the fed, i think there are various fed officials with different views and terms of what they will do with monetary policies and the need for further fiscal policies. With that said, we are still very much in a loose environment and there could be further positive sentiment, because theres a lot of cheap money running around. At least for the u. S. China, given at how quickly the chinese economy is recovering, potentially you might see a bit of tightening in order not to create any sort of double as we head into 2021. Vix showing no sign of panic. What are you buying . Will you be buying tech despite lofty valuations . Despite those valuations, there is still value to be had. Ken yeah, we have to be more selective. In particular we talk about tech, we like a lot of tech here in asia, particular when we look at i. T. Hardware names. We are more selective on the internet related names. Even when we look at markets like china, china is only trying cte. Ading four times there is definitely still opportunity but you have to be more selective right now. Rishaad what about traditional metrics for investment . Have a gun out the window and is that partly down have they gone out the window and is that partly down to the distortion and money, that is so cheap . That is one of the scenarios we have at the moment, the fact that because we have so much cheap money, it is very easy to get access to capital and thats why weve had such a fairly strong rally, especially over the past few months. That said, you have to be somewhat careful, given the fact that we still dont know exactly when a working vaccine will be available, thats why youre having a lot of people investing in growth stocks, investing in quality stocks or value stocks out there. Will you be investing more in china these days . I know youre looking at asean closely. What is the effect of the yuan, its been on a tear of late. Ken its not just the yuan. We are also seeing the yen appreciating and across the board and we look at the dollar index, is down to about 93. 5. Overall, we think there is a bit of rotation, starting earlier this year with the u. S. Dollar coming down from 100 down to about 93. That said, the u. S. Dollar can further weaken, depending on how things lay out over the next two months. If that is the case, potentially asian markets and even aussie on markets, considering how much currencies have depreciated, we think theres a lot of opportunity. Kets have sufficiently on underperformed. Haslinda what are you liking in aussie on asean markets . Most of them are still struggling with virus cases and growth in question. Ken its more of a year and feel. Shopping,y we are especially for regional investors, if theyve been heavily invested in north asia. If we look at north asian equity markets, whether korea or china, as well as taiwan, these markets have significantly outperformed. Areare right that there still some uncertainties around things that are happening, but as we approach 2021 and lets say there is a better handle around covid a lot of these markets are looking to have a bit of a rebound in terms of bts growth and gdp growth for 2021. Its more about investing now as we approach 2021. Where are some of the opportunities . Wong, we thank you for your insight today. Still to come, the latest in the fight for the vacancy for the u. S. Supreme court. Donald trump is a said to have a name in mind. The details, just ahead. This is bloomberg. Lets do a quick check of the latest business flash headlines. In hong kong, fallout from transactions,ious document thata could be Money Laundering. Has temporarily banned staff from posting on social media accounts. Courier claims it second listing in hong kong at 218 local dollars a share. That would represent a discount of about 2 from mondays close in new york and below the maximum of 268 hong kong dollars for the Retail Investor portion. Express is one of three in honglisted companies kong this week. Trump ispresident moving toward nominating Appeals Court judge Amy Coney Barrett as replacement for Ruth Bader Ginsburg. President s one of trumps finalists in 2018 when replaced Justice Anthony kennedy. Jodi has the latest. Does barrett look like a shooin . Jodi she is certainly at the top of President Trumps list. He is saying he wants to announce a nominee in the coming days and she has moved to the top of the list of people the list, as people familiar told us. Campaigneople at a rally he will pick a woman. Amy coneyrently barrett is at the top of the list. Toldready he also senator Mitch Mcconnell that the senate will go ahead with the vote and it could be done before election day. Mitch mcconnell did not commit to meeting the deadline of confirmation before election day, it would be very hard, but he said the process will be going and he is apparently going to try to get this through as soon as he can even though theres been great criticism of moving that quickly. How are the democrats reacting to the president and the Senate Majority leader saying they want to see a replacement for ginsberg approved as soon as possible and even before the election . Jodi thats right. Something democrats are not pleased about, especially because then president obamas choice in 2016, they waited eight months and they never let it go through the senate and he was not chosen. They are saying it is hypocrisy for this to happen so quickly, and Chuck Schumer has told colleagues that nothing is off the table if republicans replace Justice Ginsburg quickly, or try to, and democrats take up the white house and senate in november. They are increasingly talking about the possibility of adding justices to the port as the court as a possible response, which hasnt been tried to since the 1930s when Franklin Delano roosevelt was president. Rishaad thank you for that, Jodi Schneider there. Looking at the markets as we look forward to the start of trading in india, but looking first of all at where we are at the moment and also china as we had to lunch break. Hang seng giving up the gains of late, down again. Looking at the overall market, a bit of weakness for asia, asian equities. Well,ing from the u. S. As concerns over another wave of the coronavirus pandemic and more restrictions in place. Chinese markets looking like that, a mixed bag. Chinext up about 1 10 of 1 . This is bloomberg. Look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Just having a look at what is happening at the moment, breaking news coming through expelled fromeone the communist party for serious violation of discipline and law, that is according to the local government website. That was late thursday. What we have at the moment is the tycoon has been sentenced to 18 years in jail. We have reports coming through that he called president xi some names and now faces a corruption trial, for which he is been sentenced to 18 years. Thats what we have at the moment. He is a former chairman and was involved apparently in the illegal use of public funds and profitmaking after these through an affiliate activities through an affiliate. They expelled the tyke from the communist party for violations of discipline and law, and hes been sentenced to 18 years in jail for corruption. That is a developing story. Lets get the first word news. Karina mitchell is in new york. Karina we start with tiktok, the chinese owner says it will highn control of any document business in the u. S. , countering President Trumps assertion that it would be run would be relinquishing control of the app. It is also contesting that the u. S. Government will pocket 5 billion as part of the deal. In other news, and 18 billion initiative to deploy future covid19 vaccines around the world is moving ahead. China and the u. S. Are not on board right now. 156 countries and regions are taking part. The goal is to have 2 billion doses available by the end of next year, focusing initially on Health Care Workers and people at high risk. Infection numbers are rising with fatalities approaching one million. The u. S. Has announced new sanctions on iran, saying curbs are back in force, despite criticism from european allies and heated debate at the un Security Council. Washington says tehran is in violation of the Nuclear Accord that President Trump abandon and he expects all you in members to back u. S. Actions, but 13 of the 15 nations have said they refused to support sanctions. Today and will take the first action under this new executive order by sanctioning the Iranian Ministry of defense and armed forces logistics. Irans Defense Industries and its director. We are also sectioning the previous president of than as well, nicolas maduro. For nearly two years, a rain toronto has worked with tehran has worked with venezuela. Karina u. S. Oil operations bracing for more turbulence in the gulf of mexico as a powerful weather system had stored texas and louisiana. Tropical storm beta has already started flooding with some errors expecting 50 15 inches. Beta could drive a storm surge of more than one meter at high tide in galveston bay. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Asia trading, japan down for a second day, pretty much breakdown i financials. We have the asia index down for tens of 1 . U. S. Stocks approaching a correction, the s p on a fourday losing streak. Is mainly because of apple. Looking at the chinese markets, trading lower for a second day, a breakdown by airlines. Standing losses slumping the most 1995. Hsbc among 90 banks named in documents about suspicious funds. P, down. They have only paid about 80 of refund requests at this point in time. And the j calm down by about 1 . The dollar is pretty steady after searching the most june, the shock drop in u. S. Stocks. The yuan set for the longest retreat in nearly two months. The yen gaining after also gaining versus the dollar. Gold futures currently up 3 10 of 1 . 1917. Rishaad just looking out what has been happening with the 737 max and the drama that continues as the Administration Aviation administration engineers overseeing the aircraft say the fixes dont go far enough. This is following two crashes that killed 436 people. There is a huge amount of significance that this should be made by the union that is made by the union for the faa engineers. Yes, it shows there is a difference in opinion in regards to the fixes submitted and reviewed by the faa. It is very important to recognize that there seems to be a difference in opinion. Faa does with that we will see. These are not the only people commenting about the faa. Weve had a whistleblower. Talk about some of the other advice being received regarding what going has to do to get the max back in the air. This is part of a process right now that the faa is going through before it puts out its , after it had tested some changes that had been made. Then depending on what the report will be, it will put the max i can operations be this is a process where they basically get feedback from the public. It could be consumers, professionals. They get feedback from the general public on what has been done so far. They will look at it. A lot of them actually wanted more safety protections for pilots in case of sudden theirgs that could hinder sense of judgment. Which has happened in the previous crashes. I think a lot of the other representations coming in want this crash not happen again. Haslinda what is next . What is the next step for the faa . It has recommended multiple steps. Thehey will look through comments the public has made over the last few weeks. They will look through it. Obviously they will consider which ones they take, which ones they will probably, you know, take, but ultimately the recommendations, the feedback theyve gotten from the public be looked at closely before the faa comes down with a final report on the max fixes. These comments will not be ignored for sure. Realistically, how soon could we see the max fly again . That really depends on when the report comes out and how and what is said in the report about the fixes for it will depend on the fixes. It will depend on how the max comes back. We expect services will come back in the u. S. The start off. Other governments will have to go through what the faa has reviewed, but on top of that, they will probably also look at what the european authorities have come up with in their testing and review of the fixes that have come up, as well as other regulators like china. For other countries, it could take a bit longer for the max to come back to operation. Haslinda rishaad thank you very much. Lets take a look at asian stocks, airline stocks. Concern that these chinese here,es, the big three the victory carriers, on the way down, 3. 3 . The big three carriers at the moment, round by oversupply. Travel recovery remains in the distance and we have at the moment the airlines dropping. Pressure, despite routes. Go roots it is saying it will survive the pandemic. Loans terms on aircraft could help it avoid cropsey avoid bankruptcy. We have another Investment Bank coming out and saying they were quite positive on the recovery story for particularly chinese aviation. Haslinda a long way to recovery. Still to come, india wants to attract high tech, including phone makers, through billions of dollars in incentives. We look at how Mahendra Group is coping with the Pandemic Impact on its wide range of businesses. This is bloomberg. Haslinda Mahendra Group has a hand and everything from agriculture to autos, aerospace and i. T. , so it was no surprise that its businesses have been affected by the pandemic in a variety of ways. How they areus coping with the upheaval. Beene impact has significant on us and everyone around us. We saw the month of april essentially wiped out in terms of revenue, and the lockdown was declared in india toward the end of march. Since then, things have come back very well. Much better than we expected. There are a number of lessons from this as well. In my view, our position is stronger moving forward. While cobit is unfortunate and we hope things get better soon, while covid is unfortunate and we hope things get better soon, it is teaching us lessons about how to not just survive, but how to beat uncertainty. Riskm curious in terms of mitigation, what have you learned as a result of the virus . What we have learned is weve got to, as leaders, start being able to look around corners, and able to look at various scenarios and plan for that. We talked about many years ago and that is an understatement. We have to be able to plan for scenarios, take options and certain bets we can double down on in a certain scenario. He talked about cobit not being a black swan covid not being a black swan. What do you feel comfortable in terms of predicting visibility . Individuals, companies have said we dont have any visibility for this era next year. Meantime, u. S. Central banks are talking about they have enough visibility to keep rates really low. What kind of visibility do you feel comfortably talking about . Is it until the end of the year, next year, or you not really feel like you have any . It is very different across sectors. The difference is dramatic. Let me give some examples. Farm equipment is in his business, coming out of april , and weost zero sales had been very happy with the growth. We had 2 yearoveryear growth. In june, 12 yearoveryear growth and july was 28 . August was 69 . The Farm Equipment business has come back very well. The i. T. Business, expected a number of cancellations and customers under stress, but the last quarter was the best over for them. I. T. Business is doing extremely well. Both are driven by various factors. As we look at the auto business, that has been much weaker because of the urban lockdowns. Capacity a couple of months ago because of various supply stresses as well. That has gone up to 70 and things have started to come back. Visibility is looking poor in terms of what we expect and it will take at least six months to get back to normal and probably longer than that. Seen hugey has demand, resorts right now because of how we need to manage the virus, we only have about 50 of rooms available because we have to keep them vacant 24 hours. But many resorts are seeing bookies looking and refining it difficult to manage the demand. The hope we have right now is that things do not get worse again, that we dont see a bigger second wave youd wave. As things get better, i think Many Industries will be in good shape. We arrayed about many suppliers and smallscale industries. They have gone through more stress than some of the Larger Companies and it is important for us to make sure they survive through this and that we can help them through the crisis as well. Was the Mahendra Group cfo and deputy managing director. The start of the trading day in mumbai, in about a minute or so. Futures suggesting a steady start and that is essentially what we are getting against a backdrop where equities are under pressure in the region. It wasnt a particularly pleasant day for those markets in the session there monday either. Pushedus pandemic has apple to diversify its supply chain and india is eager to oblige. The governments alluring companies by showering them with incentives, including a 7 billion plan to attract hightech manufacturers. Apple is among the companies expected to win approval for the program. Our next guest runs a trade group for phone makers and believes indias Incentive Scheme will be a game changer. Lets bring in the chairman of the india cellular and electronics association. Thank you for joining us. Tell us what your view is of this and how it changes the landscape. Penkaj if you will permit me a little bit, on the back of the by thewe are pandemic even though april we were in lockdown, we are seeing incredible demand and incredible in theess of smartphones massive population of india. Coming to how we are trying to build a global scale industry, i think indias moment has arrived because after massive demographic dividends that india enjoys, which is also in certain competitive in terms of the cost of people and also in terms of their productivity. Companies after companies have seen indias productivity is extremely good and that is strong sense of moving manufacturing to india. We are not in competition with any nation, but i think we are trying to improve our handicaps, and slowly the world has realized india is a great place for business and to do electronic manufacturing also. Go ahead. Rishaad this whole package of incentives the government is announcing, does it go to the heart of things . ,o the research and development not just simply for these companies to move in and ultimately do less value added things Like Assembly and packaging . Working on two things. One is that the global value chain moves here. India is a very strong nation as r d,s design, development, research is concerned. Every chipset in the world is designed in india. Forave to close the gap andl assembly, components, the whole design coming together. All of that, because of the volume aspiration, which just in mumbai, were talking about 700 growth writing on 1100 from the last few years. 90 billion. Imb to by thell be accompanied Design Industry and r d. The two billiards, global value yes haslinda yes. India has been settled by infrastructure issues, and the supply chain as well. Has anything fundamentally changed for india to take advantage . Know, this is a perception of the past about india. I invite you to visit whenever you can. You will see incredible airports , notredible efficiency just for passengers but cargo, and some of the in the world. Across the country. Now, the situation quality is extremely good. Theou talk privately to people who have shipped here, manufacturing, about the efficiency or the ecosystem here, they will tell you they are happier than any other country in the world. India is a is incidents. H minor it is ruled by the law. Policymakers are independent and it has deep democratic values. That gives a sense of confidence ispeople that my i. T. Protected in this country, and everyone is on a level playing field. We are trying to build our Domestic Companies because we think india has a sweet spot in the entrylevel. Onare very strong motorcycles, entrylevel tractors. We have about 40 , 50 volume consumption and a lot of products, including smartphones. Our value a smaller but the volumes are attractive, so entrylevel products have a great market here, so the presumption is entrylevel products, india will become big. We thank you for your insights. Plenty more to come, keep it here with us. This is bloomberg. Lets do a quick check on the business flash headlines. Shall be planning to reach out the trucks will follow specific routes and stop in places where local people gather for street markets. They say the caravan aims to , sunglasses, and phones and mobile devices. Jd. Com says it is planning to spin up j. D. Health on the Hong Kong Stock Exchange, and the Online Health care unit of chinas number two Ecommerce Company has hired big of america and ubs to work on the listing, which aims to raise at least 1 billion from the share sale. Almost 13 billion has been raised in Health Care Sales in asia this year. Acrosoft says it plans to buy games publisher for more than 7 billion in cash, making it the guest came purchase ever. The biggested game purchase ever. They own several studios across the world and will give microsoft a muchneeded boost with new titles and game developers. A programming notice, join us for the bloomberg equality summit, this years take placent will as the world reckons with systemic racism. Just to tell you what is going on market wise, a day of declines at the moment, the dollar advancing, meaning the chinese yuan had fixing. A lot more on the way. East is next. Le so youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Yousef bloomberg daybreak middle east. It is a risk off market, and jay powell says the u. S. Economy is improving but has a long way to go. Tiktok oracle deal and doubt, as china says bytedance